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CapitaLand Investors’ Day 2016
“The Future CapitaLand”
Presentation By Mr. Lim Ming Yan, President & Group CEO
15 November 2016
2
Contents
• Recap Of CapitaLand’s Transformation
• What Has Changed Since 2013
• Next Strategic Thrusts
• Roadmap To ROE Target
• Conclusion
3
ION Orchard, Singapore
Recap Of CapitaLand’s Transformation
4
CapitaLand’s 2013 Strategy
1. Geography
• Two Core Markets – China (five city clusters) and
Singapore
• Growth Markets – Vietnam and Indonesia
2. Asset Class
• Integrated Developments, Residential, Office, Retail,
Serviced Residences
3. Business Model
• Balanced portfolio of trading, investment and fee-based
business;
• Capital Recycling through REITs and Private Equity Funds
Recap of CapitaLand’s Transformation
5
Key Actions Taken Since 2013 To Implement Strategy
1. Organisation
Structure
• Simplified complex structure with the sale of Australand and the privatisation of CMA
• Cost rationalisation initiatives e.g. optimize manpower planning, more shared services and strengthen Group Procurement
2. Business
operations
• De-risked Singapore residential portfolio
• Improved business operations in China – shorter time to market and more efficient capital structure
• Grown Ascott’s business significantly through management contracts and entered several new markets such as USA, Saudi Arabia, Turkey, Myanmar, Cambodia, Laos
• Increased exposure in Vietnam
• Accelerated asset recycling and portfolio reconstitution
Recap of CapitaLand’s Transformation
1
2
6
0
200
400
600
800
1,000
1,200
FY2012 FY2013 (restated) FY2014 FY2015 YTD Sept 2016
Non-operating PATMI Operating PATMI
369.3
Strengthened Growth In Operating PATMI
Operating PATMI Increased Steadily For The Past 4 Years
Note:
1. Total operating PATMI inclusive of S$16.3 million operating PATMI from discontinued operation in FY 2014 (FY2013 restated: S$108.7 million)
2. Operating PATMI excluded fair value gain of S$30.5 million arising from change in use of development projects in China in FY2016 (FY2015:
S$170.6 million).
502.51
581.81
S$ Million
Total
PATMI:
930.3Total
PATMI:
840.2
Total PATMI:
1,160.8
50%
60%40%
60%
Total PATMI:
1,065.7
653.02
61%
FV Gain
resulting
from
change in
use of
properties:
S$170.6 Mil.
16%
Westgate
Tower
sale:
S$123.5
Mil. 11%
FV Gain
resulting
from change
in use of RC
Changning
Tower 2:
S$30.5 Mil.
4%
Total PATMI:
759.8
72%
545.72
3
Recap of CapitaLand’s Transformation
7
0.470.480.48
0.390.37
0.580.60
0.570.58
0.530.51
0.480.47
0.490.47
0.440.45
0.44
0.34
0.3
0.570.570.55 0.55
0.49
0.45
0.410.39
0.41
0.36
0.2
0.3
0.4
0.5
0.6
0.7
1Q
2013
2Q
2013
3Q
2013
4Q
2013
1Q
2014
2Q
2014
3Q
2014
4Q
2014
1Q
2015
2Q
2015
3Q
2015
4Q
2015
1Q
2016
2Q
2016
3Q
2016
Net D/E Net D/E (without FRS 110)
Improved Balance Sheet Strength
Prudent Capital Management Kept Balance Sheet Robust,
Despite Of Major Acquisition In 2014
Net Debt/Equity Interest Service Ratio
CMA Acquisition
Recap of CapitaLand’s Transformation
4
4.65 5.2 5.2
4.64.2
5.3
6.8 6.7
7.9 7.97.6
0
1
2
3
4
5
6
7
8
9
4Q
2013
1Q
2014
2Q
2014
3Q
2014
4Q
2014
1Q
2015
2Q
2015
3Q
2015
4Q
2015
1Q
2016
2Q
2016
3Q
2016
8
Residential &
Office Strata
24%
Commercial &
Integrated
Development37%
Shopping Malls
21%
Serviced
Residence
17%
Others
1%
Achieved Optimal Mix Of Assets To Ensure Strong Recurring Income (As Of 30 September 2016)
Total Assets:
S$45.1 billion1
Note:1. Refers to total assets, excluding treasury cash held by CapitaLand and its treasury vehicles 2. Excludes residential component
Majority or ~76% Of Total Assets Contribute To Recurring Income;
~24% Of Total Assets Contribute To Trading Income
Trading
Properties Investment
Properties
2
Recap of CapitaLand’s Transformation
5
9 CapitaLand Presentation May 2013
Raffles City Beijing, China
What Has Changed Since 2013
10CapitaLand Limited 1H 2016 Results
Structural and regulatory challenges in the Singapore
residential market
Lower revaluations of investment properties due to lower
growth and/or higher than expected supply
Large proportion of projects under development and
assets to be stabilised
Headwinds Faced In The Last Few Years
1
2
3
What Has Changed Since 2013
11CapitaLand Limited 1H 2016 Results
Structural & Regulatory Challenges In The Singapore Market…
AverageGrowth
1970s = 9.5%
1980s = 7.8%
1990s = 7.3%
2000s= 5.3%
2010s(1)
= 3-4%Beyond 2020(2)
= 2-3%
Source: Population White Paper, January 2013, 2013; Singstat, NPTDNotes:(1) Up to 2020, outlook assumes Singapore can achieve 2% to 3% productivity growth per year (which is an ambitious
stretch target), and maintain overall workforce growth at 1% to 2%. (2) Beyond 2020, outlook assumes Singapore will continue to enjoy good prospects if Singapore remains competitive
and is able to plug into Asia’s growth. However, actual economic growth will depend on many factors: external environment, Singapore’s productivity and workforce growth etc
Singapore no longer enjoys the mid to high single digit growth
AverageGrowth
1970s = 1.5%
1980s = 2.3%
1990s = 2.8%
2000s= 2.5%
2010s(1)
= ~1.3-1.6%Beyond 2020(2)
= 1.1-1.4%
Singapore’s population growth is slowing
Residential cooling measures have had a dampening effect
Total Residential Sales
2012= ~22,200 units
2013= ~15,000 units
2014= ~7,300 units
2015=~7,400 units
What Has Changed Since 2013
1
12 Temasek Presentation, 17 October 2016
Singapore
Residential
Total CL EBIT of $2,549Mil
FY2010
Total CL EBIT of $2,316Mil
FY2015
Singapore Peers Also Face The Same Outcome
Singapore EBIT = S$920 MilSingapore EBIT = S$1,241Mil
SingaporeResidential
…Leading To Reduction In Residential Contribution
What Has Changed Since 2013
13 Temasek Presentation, 17 October 2016
0 %
5 %
10 %
15 %
20 %
China: GDP Growth (YoY%)
Real GDP: YoY GDPTarget Growth
GDP Target:6.5%~7% 2016
2Q 2016 6.7%
Source: CEIC, NBS
Slower Growth & Higher Supply In China Market
• China’s economy is going through transition from fixed asset investment & export-led to domestic consumption & innovation-led
• Stable economic growth at 6.7% in 3Q 2016
• Future rental growth of investment properties are expected to moderate with slower growth, hence lower revaluation gains
China’s Fundamentals Remain Strong Although Growth Slower Than Before
China: YOY GDP Growth
2What Has Changed Since 2013
3Q 20166.7%
Strong Focus On Operating PATMI To Make Up
For Lower Revaluation Gains
14 Temasek Presentation, 17 October 2016
Investment Properties Stabilised
69%
Only 69% Of Investment Properties Are Matured Assets1
Properties Under Development (PUDs)
15%
Investment Properties (Not Stabilised) 2
16%
What Has Changed Since 2013
Large Potential As Assets Turn Operational & Become Stabilised
3
Note:(1) As of 30 Sep 2016. Investment properties/serviced residences held by subsidiaries are based on 100% of the property
value; properties held through associate/JV are reported based on effective share of properties values. (2) Non- stabilised assets comprised properties opened/completed in the last 3 yrs
15 Temasek Presentation, 17 October 2016
Plaza Singapura, Singapore
Next Strategic Thrusts
16
Strengthen The Core Businesses
Ascott
CMA
CLS
CLC
Continue to build scale (target 80,000 units or more)
To improve technology capabilities to enhance distribution and customer engagement
Focus on Tier-1 and upper Tier 2 cities (five city clusters)
To build a sustainable pipeline of projects
Commercial – look for opportunities to reconstituteportfolio
Residential – in position to acquire new land bank
Enhance existing network and reconstitute our portfolio
Expand retail network through acquisitions and management contracts
Focus On Strengthening Competitive Advantages
Through Various Strategic Initiatives
1
Next Strategic Thrusts
17
Evolve Business Model To Real Estate Investment
+ Operating Platforms
Asset–lighter strategy: management services generate recurring income
e.g. Third-party management contracts by CMA and Ascott
Scaling up existing network
Ownership of key assets still required to anchor operating platforms
Drag On ROE Partly Due To Capital Intensity & Duration Of Projects
2
Next Strategic Thrusts
Evolve Into An Asset Lighter Model For More Sustainable Future Growth
18
• Enhanced ROE from capital recycling and acquiring third
party assets
Reduces balance sheet requirements while AUM scales up
Recurring income and higher ROE
• On track to grow AUM up to S$10 billion by 2020
Already raised 2 funds – Ascott-QIA JV (2015) and RCCIP III
(2016) of total ~S$6 billion AUM
A
B
3
Next Strategic Thrusts
Grow AUM By Using Investment Management As A Competitive Advantage
19
Staying Relevant With Real Estate Of The Future
Inspiring A New Live-Work-Play Paradigm
Leverage On Technology To Enhance Existing
Platforms
Encouraging ‘Stickiness’ To Our Malls
First Premium Co-Working Space In The CBD
Next Strategic Thrusts
4
20 CapitaLand Limited 1Q2014 Results
ION Orchard, Singapore
Roadmap To ROE
Target
21
FY 2016 FY 2018 & Beyond
How Do We Reach 8% ROE Target?
Initiatives from existing portfolio
including:
1. Higher contribution from
China & Vietnam
residential projects
2. Reduced PUDs/non-
stabilised on balance sheet
3. De-risk Singapore residential
4. Rationalise cost
New Initiatives:
1. Optimise capital
structure as current mix
of assets ensures strong
cash flow generating
capabilities
2. Higher fees from
investment
management business
~8%
>6%
Roadmap To ROE
22 Temasek Presentation, 17 October 2016
Concentrate On Execution To Achieve ROE Target
Notes:
1. Projects listed above are those planned as of 30 Sep 2016
2. Sky Vue obtained TOP in July 2016, Marine Blue and Cairnhill Nine obtained TOP in Oct 2016
3. Based on the year of opening of the first component of the particular Raffles City development
4. Office Towers 3 and 2 of Raffles City Changning have commenced operations in 3Q 2015 and 2Q 2016 respectively
5. CapitaMall Xinduxin, Qingdao opened in 2Q 2016
6. Based on number of pipeline units in Ascott’s inventory of 17,180 units that are under development as of 30 Sep 2016
2018 & Beyond20172016
Residential
Commercial /Integrated Developments
Malls
Serviced Residences6
~4,500 Pipeline Units
To Be Opened
Ascott Marunouchi Tokyo
~11,300 Pipeline Units
To Be Opened between
2018 and 2020
Ascott Taiyuan
~4,500 Pipeline Units
Opened/To Be Opened
Ascott Olaya Riyadh
Jewel Changi
Airport,
Singapore
CapitaMall
Tiangongyuan,
Beijing
The Forum Mysore,
India
CapitaMall Westgate,
Wuhan
Melawati Mall,
Kuala Lumpur
CapitaMall
Xinduxin, Qingdao5
Fortune Finance
Center, Changsha
Victoria Park Villas >5,000 China Residential Units To Be Completed in 2017 & 2018Cairnhill Nine2Sky Vue2 Marine Blue2
Raffles City Changning3,4
Funan,
Singapore
Raffles City
Chongqing3
Capital Tower,
Shanghai
Raffles City
Hangzhou3
Raffles City
Shenzhen3
LuOne,
Shanghai
Suzhou Center
Mall
Roadmap To ROE
23 CapitaLand Limited 1Q2014 Results
ION Orchard, Singapore
Conclusion
24
Significant transformation made by the Group in the last 3 years
Complexion of the business has improved with increasing share of
operating PATMI and a strong balance sheet
Evolve towards an asset lighter model with operating platforms
Achieving ROE target delayed mainly due to weak Singapore
residential market as well as projects under development
However, there is an actionable plan to work towards 8% ROE area
within the next 2-3 years
Conclusion
1
2
3
4
5
Strengthen Core, Evolve Business Model,
Grow AUM, Stay Relevant
Conclusion
Thank You